1 / 21

Merger or Strategic Shift?

Merger or Strategic Shift? . Key Recommendations. Do Not Merge with. Establish a Joint Venture with. Explore Further Growth Opportunities. Key Recommendations  Industry Trends  Merger Issues  Sprint  Further Opportunities.

gyula
Download Presentation

Merger or Strategic Shift?

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Merger or Strategic Shift?

  2. Key Recommendations Do Not Merge with Establish a Joint Venture with Explore Further Growth Opportunities Key Recommendations  Industry Trends  Merger Issues  Sprint  Further Opportunities

  3. Rather than offer a bid to merge with DirecTV LLC, Dish should form a joint venture with Sprint and move into the wireless broadband space Key Recommendations  Industry Trends  Merger Issues  Sprint  Further Opportunities

  4. Industry Trends The Rise of Fixed-Wireless Broadband Key Recommendations Industry Trends  Merger Issues  Sprint  Further Opportunities

  5. Industry Trends • Pay-TV is a mature market with flattening overall growth • Loss of 105,000 subs in 2013 • Programming cost growing steadily at ~9.6% • Changing consumer demand • Sat-TV subs gains in the Pay-TV market are on the verge of reversal • Telecom subs gains (~1.5mm) are head and shoulders above Cable (1.7mm loss) and Sat-TV (170k) • Dish and DTV gross add trends are both stalling, (+0.0% vs. + 0.8%) Key Recommendations Industry Trends  Merger Issues  Sprint  Further Opportunities

  6. Industry Trends • Efforts to expand beyond the market is the future • Bundled services reduce churn and increase per customer revenue • Rural underserved population (<6Mps) equals a 54mm household opportunity • Changing consumer demands in the Pay-TV market • Netflix subscribers and growth dwarf all competitors with 2.3mm new subs in Q4 2013 alone. • Different players are jumping into the Pay-TV market. Sat-TV is stalling in a stalling Pay-TV market. It’s time to move on. Key Recommendations Industry Trends  Merger Issues  Sprint  Further Opportunities

  7. Do Not Merge with Establish a Joint Venture with Explore Further Growth Opportunities Key Recommendations Industry Trends Merger Issues  Sprint  Further Opportunities

  8. The Case Against Merging Key Recommendations Industry Trends Merger Issues  Sprint  Further Opportunities

  9. Key Recommendations Do Not Merge with Establish a Joint Venture with Explore Further Growth Opportunities Key Recommendations Industry Trends  Merger Issues Sprint Further Opportunities

  10. Should establish a joint venture with A joint venture will causemarket penetration and expansion Shared resources will lead to savings of $1.6B in CapEx Pre-existing InfrastructureSupports a Strategic Partnership • No additional expenditure on infrastructure • Leveraging existing expertise1 • 54M Household Opportunity9 • LTE Broadcast Opportunity10 • Combined potential revenues of $24B • Market share gain of +6% • Dish’s wireless spectrum7 • Sprint LTE capacity8 • Pilot LTE/Broadcast program in TX3 Key Recommendations Industry Trends  Merger Issues Sprint Further Opportunities

  11. Pre-Existing Infrastructure Supports a Strategic Partnership • Expansive • national cellular tower network; • not enough spectrum, even with Clearwire acquisition; • Limited LTE Distribution Hybrid LTE/Broadband • 700MHz E Block LTE/Broadcast; • need LTE capability • PCS H Block  Fixed Wireless Broadband; need Cell Towers Source: SEC.gov Key Recommendations Industry Trends  Merger Issues Sprint Further Opportunities

  12. A Partnership will Serve Underserved Households 16%2 Underserved HHs Direct-to-home TV or Mobile Content 19% (+6pt) Share in Pay TV HHs!3 Simultaneous multicast: 2nd Screen capability 1 Conservative approach assuming competitive activity 2 Match Sprint current share (source: Ibisworld) 3 Vs 2013 current share within Pay TV (source: S&P) Key Recommendations Industry Trends  Merger Issues Sprint Further Opportunities

  13. Shared Resource will lead to $7.5bn Synergies • Year 1 assumption • $1.0bn/year, growing to $1.4 runrate by Year 4 Source: SEC.gov Key Recommendations Industry Trends  Merger Issues Sprint Further Opportunities

  14. Total NPV of $24 billion in 5 Years Key Recommendations Industry Trends  Merger Issues Sprint Further Opportunities

  15. Key Recommendations Do Not Merge with Establish a Joint Venture with Explore Further Growth Opportunities Key Recommendations Industry Trends  Merger Issues  Sprint  Further Opportunities

  16. Further Growth Opportunities • Human Capital Demands • Expand in-house expertise on wireless 4G capability. • Retraining existing technicians • Hiring hardware engineers • Hiring software and UX engineers • Leadership – executive communication liaison. • Expand Future Content • Current partnership with • AutoHop technology as leverage Becoming an ISP through fixed-wireless broadband • Test Future Strategic Partnerships • Building strategic partners in the set-top box wars Key Recommendations Industry Trends  Merger Issues  Sprint  Further Opportunities

  17. Do Not Merge with Establish a Joint Venture with Explore Further Growth Opportunities Questions Comments Clarifications

  18. References • Keil, T. & Laamanen, T. (2011, 12). When rivals merge, think before you follow suit. Harvard Business Review, 89(12), 25-27. Retrieved from http://web.a.ebscohost.com/ehost/detail?sid=9daf39a9-68d4-4327-8c50-b4abf851a19b@sessionmgr4005&vid=1&hid=4109&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ== • Lieberman, D. (2014, 03, 31). Dish network-DirectTV merger? don't bet on it, analysts warn. Retrieved, from http://www.deadline.com/2014/03/dont-bet-just-yet-on-a-dish-network-directv-merger-analysts-warn/ • Hannan, C. (2013, 01, 02) Dish Network, the Meanest Company in America. Businessweek.com, Retrieved from:http://www.businessweek.com/articles/2013-01-02/dish-network-the-meanest-company-in-america • Weber, R. A., Camerer, C. F. (2003). Cultural Conflict and Merger Failure. Management Science 49(4), 400-415. • Stahl, G. K., & Voigt, A. Do Cultural Differences Matter in Mergers and Acquisitions? A Tentative Model and Examination. Organization Science 19(1), 160-176. Retrieved from: http://www.jstor.org/stable/25146169 . • Christensen, C. M., Alton, R., Rising, C., Waldeck, A. (2011). The New M&A Playbook. Harvard Business Review, 89(3), 48-57.http://www.extremetech.com/electronics/177897-dish-secures-spectrum-for-150mbps-lte-to-rural-homes-in-the-us • http://www.rethink-wireless.com/2013/12/18/sprint-dish-trial-fixed-lte-service.htm • http://newsroom.sprint.com/news-releases/sprint-and-dish-to-trial-fixed-wireless-broadband-service.htm • http://www.sec.gov/Archives/edgar/data/101830/000110465913029234/a13-10109_2425.htm • Dish secures spectrum for 150Mbps LTE wireless broadband to rural homes in the US | ExtremeTech • http://blogs.hbr.org/2011/07/the-soft-things-that-make-merg/ • http://hbr.org/2009/10/mergers-that-stick/ar/1 • http://www.forbes.com/sites/dorothypomerantz/2014/03/31/why-a-directv-dish-network-merger-might-be-different-this-time-around/ • http://variety.com/2014/biz/news/dish-sets-stage-for-directv-merger-with-transfer-of-satellites-analyst-12011153383 • http://www.deadline.com/2014/03/dont-bet-just-yet-on-a-dish-network-directv-merger-analysts-warn/ Other References: • Mergent • S&P NetAdvantage Capital IQ • Bloomberg • ValueLine • WSJ – All Things D

  19. Appendix

  20. Appendix

  21. Appendix

More Related